Authorization Fees on Your Statement

What an authorization is

When a customer taps, inserts or enters a card, your terminal or website sends an authorization request through the card network to the bank that issued the card. The bank answers yes or no. An approval is not yet a completed sale: the sale is completed when it is cleared and settled, usually after your batch closes. Your processor can charge a fee at the request step, at the settlement step, or both, depending on your agreement. Visa's rules require authorization requests to contain complete, accurate and valid data, and say a merchant that reattempts a request after a decline must not manipulate data elements from the original request.

How the steps fit together: How card payments work: authorization, clearing, settlement

Why authorizations and sales are different counts

Several ordinary events create an authorization request without creating a new sale. A declined card that is tried again is a second request. A card saved on file may be checked with an account verification request. A hotel, rental or bar tab may start with a hold and add to it later. A sale that is cancelled after approval needs a reversal: Visa's rules require a merchant to submit an authorization reversal within 24 hours when a sale is cancelled, or when the final amount is less than the amount authorized. Staff who void and re-run a card to fix a mistake create extra requests as well. Each of these can carry its own fee, so a business can pay for more requests than it has sales.

A related network fee in Canada: Card holds and reversals: new Canada fee

Where it shows on a statement

On a flat-rate plan you may not see a separate line at all, because the cost is built into the rate. On interchange-plus pricing it is usually listed on its own. Either way, the question is the same: what is the amount per request, and how many requests did you pay for last month?

Retries: the rule that limits them

Retrying a declined card is the most common source of extra requests, especially for online and recurring billing. Visa's rules sort decline codes into categories. For Category 1 declines, such as a closed account or a lost or stolen card, a merchant must never resubmit an authorization request or account verification for the same payment credential. For Categories 2 to 4, which include insufficient funds, reattempts are permitted up to 20 attempts in 30 days. That number is a ceiling, not a plan. Every retry is another request, and on many agreements another fee, so retry only declines that can be approved later, and ask the customer for another payment method when the answer will not change.

Reduce declines at the source: Authorisation rates: what you control in the request

What changes for small, mid-size and enterprise businesses

For a small business with many low-value sales, a fixed per-request fee is a larger share of each sale than it is on a large ticket, so check the amount against your average sale. A mid-size business selling online or by subscription should watch declines and retries, address verification fees and any per-request gateway fee, because these grow with order count rather than sales value. Multi-location and enterprise operations should ask for authorization counts by location, channel and decline reason each month. One location or one checkout with far more requests than sales usually points to a setting, a retry rule or a staff habit. Larger merchants should also confirm that the gateway and the processor are not both charging for the same request without a reason, and should raise per-request pricing when agreements are renewed or compared.

We will count them for you

CELER Merchants is an independent agent, not a processor. Send us a recent statement and we will show you where per-request charges appear, how many requests you paid for, and which questions to put to your processor. The review is free and there is no obligation.